ScoMo winner, banks grinners as ASX nears 12-year high

Aftermarket wrap 20 May 2019

VideoThe West finance reporter Meilin Chew runs through the day on the markets.Video: TheWest

The Australian sharemarket has roared higher, posting its best day in 15 weeks following the Coalition’s surprise Federal election victory.

The S&P/ASX200 index was up 110.8 points, or 1.74 per cent, to 6476.1 while the all ordinaries was up 104.5 points, or 1.62 per cent, to 6564.7.

It was the fourth-straight day of gains for the ASX200, and the best day since February 5, hitting a level it has not seen since November 2007.

“A very big day, a very strong day, a lot of money flowed through the markets,” said CommSec market analyst Steven Daghlian.

Banking stocks in particular were resurgent, collectively soaring 5.85 per cent, with the four heavyweights posting gains of between 6 per cent and 9 per cent.

Together those four stocks accounted for more than 80 per cent of the ASX200’s gains.

“It’s not often we see blue chip stocks gaining 9 per cent in a single day,” CMC Markets chief market strategist Michael McCarthy said.

And yet Westpac was up 9.2 per cent to $27.75, while NAB gained 7.9 per cent to $25.81, ANZ was up 7.8 per cent to $27.86 and Commonwealth Bank gained 6.3 per cent to $77.40.

Medical insurers also enjoyed some of the day’s strongest gains, with NIB soaring 15.79 per cent to $6.82 and Medibank up 11.5 per cent to $3.21 as it became clear Labor’s plan to limit premium increases to 2 per cent a year wouldn’t be taking effect.

Yancoal, which could have been hurt by Labor’s stricter environmental policies, gained 5.2 per cent to $3.47, while Whitehaven Coal was up 1.42 per cent to $4.30.

Companies that do not typically pay franked dividends, such as airports and real estate trusts, were lower.

Mr McCarthy said investors had likely moved into such companies in the expectation that Labor would scrap franking credits, and were now moving out of them.

Property trust Dexus was down 0.7 per cent to $12.95, Goodman Group was down one per cent to $13.58 and Sydney Airport was down 3.96 per cent to $7.51.

With negative gearing apparently here to stay, companies exposed to the property market also gained.

Developer Stockland Group surged 4.8 per cent to $4.12, building material company Boral gained 4.7 per cent to $4.91 and Realestate.com.au operator REA Group was up 4.1 per cent to $91.35.

But childcare provider G8 Education was down 2.7 per cent to $2.88 as investors realised Labor wouldn’t be in power to fulfil its promise to increase childcare subsidies.

Tech stocks were also down, collectively 1.43 per cent, as investors switched out of the sector.

Not everything was about the election. Fortescue Metals gained 3 per cent to $9.22 after the price of iron ore rose 2.4 per cent to break the $US100 a tonne level for the first time in five years.

The Aussie dollar had a more muted reaction, buying US69.26¢, up from US68.89¢ on Friday.

Mr Daghlian said currency traders would be watching the Reserve Bank’s release of minutes on Tuesday, as well as a speech by RBA Governor Philip Lowe set for 1310 AEST, for hints on whether an expected interest rate cut was likely soon.